IRD fights growing cash economy among builders, tradies
Tradespeople are doing cash jobs worth up to $20,000 or more under the table, as cash jobs continue to allow massive sums of tradie money to go untaxed, the IRD has revealed.
In an Inland Revenue Department survey of around 500 tradespeople, a quarter said under-the-table jobs were common in the building and construction industry.
Of those surveyed, 79 per cent also believed it was a crime.
Another survey found 11 per cent of tradies surveyed said they were aware of cash jobs worth more than $20,000 going untaxed.
The surveys are part of a IRD campaign targeting Christchurch this week, after previous campaigns in Auckland and Queenstown earlier this year.
The department said there had been a big shift in people's attitudes towards tax avoidance compared to four years ago, when it first began its research.
A quick survey by TVNZ found that three out of six tradesman contacted for a quote provided a cash price, without being asked.
John Gray, from the Homeowners and Buyers Association of New Zealand, said he was dealing with at least a dozen complaints a month of dodgy alterations work, often by people willing to do cash jobs.
"We think that is in part related to the fact that people aren't in the position to move on and buy a new home but there is value in their homes, particularly Auckland where they can borrow against that improved equity position to renovate their homes."
Because many qualified builders were being lured away to bigger jobs, Gray said unlicensed tradespeople were coming forward to meet the demand, dropping brochures or advertising in local newspapers.
"For us, there's a distinct connection between these people who are prepared to do cash jobs and the job that ends up by really compromising the owners.
"They're willing to break the tax law and they're equally willing to break the building law."
However, Grant Florence of the Certified Builders Association said he had no evidence that the alterations industry was being filled by unlicensed "cashies".
"A lot of our members who have done alterations particularly in the large markets like Auckland are continuing to do alterations ... they haven't drifted off to do new homes."
He said his organisation had worked with IRD in the past but its focus was currently on other issues.
"I think the industry has enough challenges around quality and the shortage of tradepeople."
IRD group manager of marketing Andrew Stott said that whenever there were lot of new entrants to an industry, there were often non-compliance issues with tax.
"Part of that isn't necessarily intentional, part of that is a whole lot of new people coming in and might not have run a business before ... so our job there is to help them understand what is they have to do.
"But on behalf of those who are trying to do the right thing, we've got to make sure that we're dealing with those who aren't, because it's not fair to those who don't want to do cash jobs and if they're being undercut by others."
There were various estimates as to how much money was being lost in the "hidden economy. "We can't know ... I've heard numbers bandied around between $6 billion and $9b We don't spend our time trying to verify those because they're all guess work but really, that's a lot of money."
And the penalties could be significant. "It is a crime so there is jail time potential and every year we see that.
"But one that's often forgotten is that if they are part of a registered association, a master trades or a registered builders, if they're convicted they lose their licence, which means they can't continue to work with reputable organisations."
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